Documents found in this filing:

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2011.

o

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From to .

Commission file number 001-34877

CoreSite Realty Corporation

(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction
of incorporation)

27-1925611
(IRS Employer
Identification Number)

1050 17th Street, Suite 800

Denver, CO

80265

(Address and zip code of principal executive offices)

(Zip Code)

(866) 777-2673
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ
No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes o No þ

The number of shares of common stock outstanding at May 4, 2011 was 19,866,760

CoreSite Realty Corporation, (the Company, we, or our), was organized in the state of
Maryland on February 17, 2010 and is a fully integrated, self-administered, and self-managed real
estate investment trust (REIT). Through our controlling interest in CoreSite, L.P. (our
Operating Partnership), we are engaged in the business of owning, acquiring, constructing and
managing technology-related real estate.

On September 28, 2010 we completed our initial public offering (the IPO) which resulted in
the sale of 19,435,000 shares of our common stock, including 2,535,000 shares as a result of the
underwriters exercising their over-allotment option, at a price per share of $16.00, generating
gross proceeds to the Company of $311.0 million. The proceeds to the Company, net of
underwriters discounts, commissions and other offering costs were $285.6 million.

Upon completion of the IPO, our Operating Partnership entered into various formation
transactions and acquired 100% of the ownership interests in the entities that owned our
Predecessor, as defined below, from certain real estate funds (the Funds) affiliated with The
Carlyle Group. Our Predecessor includes the limited liability companies which were all wholly
owned, directly or indirectly, by CRP Fund V Holdings, LLC. We have determined that CRP Fund V
Holdings, LLC is the acquirer for accounting purposes and therefore, interests contributed by CRP
Fund V Holdings, LLC in the formation transactions (the Predecessor entities and properties) were
recorded at historical cost.

Additionally, our Operating Partnership acquired 100% of the ownership interests in the
entities that owned the CoreSite Acquired Properties, as defined below, from the Funds and their
affiliates. The contribution or acquisition of interests in the CoreSite Acquired Properties was
accounted for as an acquisition under the acquisition method of accounting and recognized at the
estimated fair value of acquired assets and assumed liabilities on the date of the contribution.

Accordingly, the results of operations for the three months ended March 31, 2010 reflect the
financial condition and operating results of our Predecessor only. The results of operations for
the three months ended March 31, 2011 reflect the financial condition and results of operations
of our Predecessor, together with the CoreSite Acquired Properties which we acquired upon
completion of our initial public offering and the formation transactions on September 28, 2010,
the date of acquisition. The accompanying condensed consolidated financial statements include the
following entities and properties:

CoreSite Predecessor

Coresite Acquired Properties

CRP Fund V Holdings, LLC

One Wilshire

1656 McCarthy

900 N. Alameda

2901 Coronado

55 S. Market

Coronado-Stender Properties

427 S. LaSalle

70 Innerbelt

1275 K Street

32 Avenue of the Americas

2115 NW 22nd Street

12100 Sunrise Valley

CoreSite, LLC

2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by
management in accordance with U.S. generally accepted accounting principles (GAAP) for interim
financial information and in compliance with the rules and regulations of the United States
Securities and Exchange Commission. Accordingly, these condensed consolidated financial
statements do not include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been included. The
results of operations for the three months ended March 31, 2011 are not necessarily indicative of
the expected results for the year ending December 31, 2011. These condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in our annual report on Form 10-K for the year ended
December 31, 2010. Intercompany balances and transactions have been eliminated.

The preparation of the condensed consolidated financial statements in conformity with
accounting principles generally accepted in the U.S. requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingencies at the date of the condensed consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. We evaluate our estimates,
including those related to assessing the carrying values of our real estate properties, accrued
liabilities, performance-based equity compensation plans, and qualification as a REIT based on
estimates of historical experience, current market conditions, and various other assumptions that
are believed to be reasonable under the circumstances. Actual results may vary from those
estimates and those estimates could vary under different assumptions or conditions.

Investments in Real Estate

Real estate investments are carried at cost less accumulated depreciation and amortization.
The cost of real estate includes the purchase price of the property and leasehold improvements.
Expenditures for maintenance and repairs are expensed as incurred. Significant renovations and
betterments that extend the economic useful lives of assets are capitalized. During the
development of the properties, the capitalization of costs, which include interest, real estate
taxes and other direct and indirect costs, begins upon commencement of development efforts and
ceases when the property is ready for its intended use. Interest is capitalized during the period
of development based upon applying the weighted-average borrowing rate to the actual development
costs expended. Capitalized interest costs were $0.1 million and $0.2 million for the three
months ended March 31, 2011 and 2010, respectively.

Depreciation and amortization are calculated using the straight-line method over the
following useful lives of the assets:

Buildings

27 to 40 years

Building improvements

1 to 15 years

Leasehold improvements

The shorter of the lease term or useful life of the asset

Depreciation expense was $8.6 million and $2.6 million for the three months ended March 31,
2011 and 2010, respectively.

Acquisition of Investment in Real Estate

Purchase accounting is applied to the assets and liabilities related to all real estate
investments acquired. The fair value of the real estate acquired is allocated to the acquired
tangible assets, consisting primarily of land, building and improvements, and identified
intangible assets and liabilities, consisting of the value of above-market and below-market
leases, value of in-place leases and the value of customer relationships.

The fair value of the land and building of an acquired property is determined by valuing the
property as if it were vacant, and the as-if-vacant value is then allocated to land and
building based on managements determination of the fair values of these assets. Management
determines the as-if-vacant fair value of a property using methods similar to those used by
independent appraisers. Factors considered by management in performing these analyses include an
estimate of carrying costs during the expected lease-up periods considering current market
conditions and costs to execute similar leases.

The fair value of intangibles related to in-place leases includes the value of lease
intangibles for above-market and below-market leases, lease origination costs, and customer
relationships, determined on a lease-by-lease basis. Above-market and below-market leases are
valued based on the present value (using an interest rate which reflects the risks associated
with the leases acquired) of the difference between (i) the contractual amounts to be paid
pursuant to the in-place leases and (ii) managements estimate of fair market lease rates for the
corresponding in-place leases, measured over a period equal to the remaining non-cancelable term
of the lease and, for below-market leases, over a period equal to the initial term plus any
below-market fixed rate renewal periods. Lease origination costs include estimates of costs
avoided associated with leasing the property, including tenant allowances and improvements and
leasing commissions. Customer relationship intangibles relate to the additional revenue
opportunities expected to be generated through interconnection services and utility services to
be provided to the in-place lease tenants.

The capitalized values for above and below-market lease intangibles, lease origination
costs, and customer relationships are amortized over the term of the underlying leases.
Amortization related to above-market and below-market leases where the Company is the lessor is
recorded as either an increase to or a reduction of rental income, amortization related to
above-market and below-market leases where the Company is the lessee is recorded as either an
increase to or a reduction of rent expense and amortization for lease origination costs and
customer relationships are recorded as amortization expense. If a lease is terminated prior to
its stated expiration, all unamortized amounts relating to that lease are written off. The
carrying value of intangible assets is reviewed for impairment in connection with its respective
asset group whenever events or changes in circumstances indicate that the asset group may not be
recoverable. An impairment loss is recognized if the carrying amount of the asset group is not
recoverable and its carrying amount exceeds its estimated fair value.

The excess of the cost of an acquired business over the net of the amounts assigned to
assets acquired (including identified intangible assets) and liabilities assumed is recorded as
goodwill. As of March 31, 2011, we had approximately $41.2 million of goodwill. The Companys
goodwill has an indeterminate life and is not amortized, but is tested for impairment on an
annual basis, or more frequently if events or changes in circumstances indicate that the asset
might be impaired.

Cash and Cash Equivalents

Cash and cash equivalents include all non-restricted cash held in financial institutions and
other non-restricted highly liquid short-term investments with original maturities at acquisition
of three months or less.

Restricted Cash

The Company is required to maintain certain minimum cash balances in escrow by loan
agreements to cover various building improvements and obligations related to tax assessments and
insurance premiums. The Company is legally restricted by these agreements from using this cash
other than for the purposes specified therein.

Deferred Costs

Deferred leasing costs include commissions and other direct and incremental costs incurred
to obtain new customer leases, which are capitalized and amortized over the terms of the related
leases using the straight-line method. If a lease terminates prior to the expiration of its
initial term, any unamortized costs related to the lease are written off to amortization expense.

Deferred financing costs include costs incurred in connection with obtaining debt and
extending existing debt. These financing costs are capitalized and amortized on a straight-line
basis, which approximates the effective-interest method, over the term of the loan and are
included as a component of interest expense.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is
recognized when estimated expected future cash flows (undiscounted and without interest charges)
are less than the carrying amount of the assets. The estimation of expected future net cash flows
is inherently uncertain and relies to a considerable extent on assumptions regarding current and
future economics and market conditions and the availability of capital. If, in future periods,
there are changes in the estimates or assumptions incorporated into the impairment review
analysis, the changes could result in an adjustment to the carrying amount of the assets. To the
extent that an impairment has occurred, the excess of the carrying amount of long-lived assets
over its estimated fair value would be charged to income. For the three months ended March 31,
2011 and 2010 no impairment was recognized.

Derivative Instruments and Hedging Activities

We reflect all derivative instruments at fair value as either assets or liabilities on the
condensed consolidated balance sheets. For those derivative instruments that are designated, and
qualify, as hedging instruments, we record the effective portion of the gain or loss on the hedge
instruments as a component of accumulated other comprehensive income. Any ineffective portion of
a derivatives change in fair value is immediately recognized in earnings. For derivatives that
do not meet the criteria for hedge accounting, changes in fair value are immediately recognized
in earnings.

Revenue Recognition

All leases are classified as operating leases and minimum rents are recognized on a
straight-line basis over the non-cancellable term of the agreements. The excess of rents
recognized over amounts contractually due pursuant to the underlying leases are included in
deferred rent receivable. If a lease terminates prior to its stated expiration, the deferred rent
receivable relating to that lease is written off to rental revenue.

When arrangements include both lease and nonlease elements, the revenues associated with
separate elements are allocated based on their relative fair values. The revenue associated with
each element is then recognized as earned. Interconnection, utility and power services are
considered as separate earnings processes that are provided and completed on a month-to-month
basis and revenue is recognized in the period that the services are performed. Utility and power
services are included in power revenue in the accompanying statements of operations.
Interconnection services are included in other revenue in the accompanying statements of
operations. Set-up charges and utility installation fees are initially deferred and recognized
over the term of the arrangement as other revenue or the expected period of performance unless
management determines a separate earnings process exists related to an installation charge.

Tenant reimbursements for real estate taxes, common area maintenance, and other recoverable
costs are recognized in the period in which the expenses are incurred.

Above-market and below-market lease intangibles that were acquired are amortized on a
straight-line basis as decreases and increases, respectively, to rental revenue over the
remaining non-cancellable term of the underlying leases. For the three months ended March 31,
2011 and 2010, the net effect of amortization of acquired above-market and below-market leases
resulted in an increase to rental income of $0.4 million and $0.2 million, respectively.
Balances, net of accumulated amortization, at March 31, 2011 and December 31, 2010, are as
follows (in thousands):

March 31,

December 31,

2011

2010

Lease contracts above-market value

$

8,668

$

8,668

Accumulated amortization

(2,092

)

(1,360

)

Lease contracts above-market value, net

$

6,576

$

7,308

Lease contracts below-market value

$

21,404

$

21,404

Accumulated amortization

(6,111

)

(4,989

)

Lease contracts below-market value, net

$

15,293

$

16,415

A provision for uncollectible accounts is recorded if a receivable balance relating to
contractual rent, rent recorded on a straight-line basis, and tenant reimbursements is considered
by management to be uncollectible. At March 31, 2011 and December 31, 2010 the allowance for
doubtful accounts totaled $0.4 million and $0.3 million, respectively. Additions (reductions) to
the allowance for doubtful accounts were $0.1 million and $(0.1) million for the three months
ended March 31, 2011 and 2010, respectively. Write-offs charged against the allowance were less
than $0.1 million and less than $0.1 million for the three months ended March 31, 2011 and 2010,
respectively.

Share-Based Compensation

We account for share based compensation using the fair value method of accounting. The
estimated fair value of the stock options granted by us is being amortized on a straight-line
basis over the vesting period of the stock options. The fair value of restricted share-based and
Operating Partnership unit compensation is based on the market value of our common stock on the
date of the grant and is amortized on a straight-line basis over the vesting period.

Advertising Costs

Advertising costs are expensed as incurred and are included in sales and marketing expense.
Advertising costs were less than $0.1 million and less than $0.1 million for the three months
ended March 31, 2011 and 2010, respectively.

Asset Retirement Obligations

We record accruals for estimated retirement obligations. The asset retirement obligations
relate primarily to the removal of asbestos and contaminated soil during development or
redevelopment of the properties as well as the estimated equipment removal costs upon termination
of a certain lease under which the Company is the lessee. At March 31, 2011 and December 31,
2010, the amount included in other liabilities on the condensed consolidated balance sheets was
approximately $2.0 million and $2.1 million, respectively.

Income Taxes

We will elect to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the
Code), commencing with our taxable year ending December 31, 2010 upon filing our federal income
tax return for such year. To qualify as a REIT, we are required to distribute at least 90% of our
taxable income to our stockholders and meet the various other requirements imposed by the Code
relating to such matters as operating results, asset holdings, distribution levels and diversity
of stock ownership. Provided we qualify for taxation as a REIT, we are generally not subject to
corporate level federal income tax on the earnings distributed currently to our stockholders. If
we fail to qualify as a REIT in any taxable year, and are unable to avail ourselves of certain
savings provisions set forth in the Code, all of our taxable income would be subject to federal
income tax at regular corporate rates, including any applicable alternative minimum tax.

To maintain REIT status we will distribute a minimum of 90% of the Companys taxable income.
However, it is our policy and intent, subject to change, to distribute 100% of the Companys
taxable income and therefore no provision is required in the accompanying financial statements
for federal income taxes with regards to activities of the REIT and its subsidiary pass-through
entities. Any taxable income prior to the completion of the IPO is the responsibility of the
Companys prior members. The allocable share of income is included in the income tax returns of
the members. The Company is subject to the statutory requirements of the locations in which it
conducts business. State and local income taxes are accrued as deemed required in the best
judgment of management based on analysis and interpretation of respective tax laws.

We have elected to treat one of our subsidiaries as a taxable REIT subsidiary (TRS).
Certain activities that we undertake must be conducted by a TRS, such as services for our tenants
that would otherwise be impermissible for us to perform and holding assets that we cannot hold
directly. A TRS is subject to corporate level federal and state income taxes. Relative deferred
tax assets and liabilities arising from temporary differences in financial reporting versus tax
reporting are also established as determined by management.

Deferred income taxes are recognized in certain taxable entities. Deferred income tax is
generally a function of the periods temporary differences (items that are treated differently
for tax purposes than for financial reporting purposes), the utilization of tax net operating
losses generated in prior years that had been previously recognized as deferred income tax assets
and the reversal of any previously recorded deferred income tax liabilities. A valuation
allowance for deferred income tax assets is provided if we believe all or some portion of the
deferred income tax asset may not be realized. Any increase or decrease in the valuation
allowance resulting from a change in circumstances that causes a change in the estimated
realizability of the related deferred income tax asset is included in deferred tax expense. As of
March 31, 2011, the deferred income taxes were not material.

We currently have no liabilities for uncertain tax positions. The earliest tax year the
Company is subject to examination is 2010. Prior to their contribution to our Operating
Partnership, our subsidiaries were treated as pass-through entities for tax purposes and the
earliest year for which our subsidiaries are subject to examination is 2007.

Concentration of Credit Risks

The Companys cash and cash equivalents are maintained in various financial institutions,
which, at times, may exceed federally insured limits. The Company has not experienced any losses
in such accounts, and management believes that the Company is not exposed to any significant
credit risk in this area. The Company has no off-balance-sheet concentrations of credit risk,
such as foreign exchange contracts, option contracts, or foreign currency hedging arrangements.

For the three months ended March 31, 2011 and 2010, total operating revenues recognized from
one customer accounted for 12.2% and 9.4%, respectively. For the three months ended March 31,
2011 and 2010, total operating revenues recognized from another customer accounted for 3.7%, and
14.3%, respectively. The Company obtains security deposits from most of its tenants.

Segment Information

The Company manages its business as one reportable segment consisting of investments in data
centers located in the United States. Although the Company provides services in several markets,
these operations have been aggregated into one reportable segment based on the similar economic
characteristics amongst all markets, including the nature of the services provided and the type
of customers purchasing these services.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2010-28, IntangiblesGoodwill and Other. This ASU amends ASC Topic
350 and clarifies the requirement to test for impairment of goodwill. ASC Topic 350 has required
that goodwill be tested for impairment if the carrying amount of a reporting unit exceeds its
fair value. Under ASU 2010-28, when the carrying amount of a reporting unit is zero or negative
an entity is required to assess, considering qualitative factors such as those used to determine
whether a triggering event would require an interim goodwill impairment test, whether it is more
likely than not that a goodwill impairment exists and perform step 2 of the goodwill impairment
test if so concluded. The modifications to ASC Topic 350 resulting from the issuance of ASU
2010-28 are effective for fiscal years beginning after December 15, 2010 and interim periods
within those years. The new guidance was effective January 1, 2011 for the Company. The adoption
of this standard did not have an impact on our condensed consolidated financial statements.

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements. The
new standard changes the requirements for establishing separate units of accounting in a
multiple-element arrangement and requires the allocation of arrangement consideration to each
deliverable based on the relative selling price. ASU 2009-13 is effective for revenue
arrangements entered into in fiscal years beginning on or after June 15, 2010. The new guidance
was effective January 1, 2011 for the Company. The adoption of this standard did not have a
material impact on our condensed consolidated financial statements.

The Company can elect to have borrowings under the credit facility bear interest at a rate per annum equal to (i) LIBOR plus 350 basis points
to 400 basis points, or (ii) a base rate plus 250 basis points to 300 basis points, depending on our leverage

(2)

On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S. LaSalle property which was scheduled to mature on March 9, 2012.

(3)

In October 2010, we entered into an interest rate swap agreement and an interest rate cap agreement, each as a cash flow hedge for interest
incurred by these LIBOR based loans.

(4)

The mortgage contains one two-year extension option subject to the Company meeting certain financial and other customary conditions and the payment
of an extension fee equal to 60 basis points.

In conjunction with our IPO and formation transactions, our Operating Partnership entered
into a $110.0 million senior secured revolving credit facility with a group of lenders for which
KeyBank National Association acts as the administrative agent. The revolving credit facility is
unconditionally guaranteed on an unsecured basis by CoreSite Realty Corporation. CoreSite, L.P.
acts as the parent borrower and its subsidiaries that own the real estate properties known as
1656 McCarthy, 70 Innerbelt, 2901 Coronado and 900 N. Alameda are co-borrowers under the
facility, and such real estate properties provide security for the facility. Each of the parent
borrower and the subsidiary borrowers are liable under the facility on a joint and several basis.
The facility has an initial maturity date of September 28, 2013 with a one-time extension option,
which if exercised, would extend the maturity date to March 28, 2014. The exercise of the
extension option is subject to the payment of an extension fee equal to 25 basis points of the
facility at initial maturity and certain other customary conditions. As of March 31, 2011,
the Company has not drawn any funds under the facility.

The Company can elect to have borrowings under the credit facility bear interest at a rate
per annum equal to (i) LIBOR plus 350 basis points to 400 basis points, depending on our leverage
ratio, or (ii) a base rate plus 250 basis points to 300 basis points, depending on our leverage
ratio. The secured revolving credit facility contains an accordion feature that allows us to
increase the total commitment by $90.0 million, to $200.0 million, under specified circumstances.

The total amount available for us to borrow under the facility will be subject to the lesser
of a percentage of the appraised value of our properties that form the designated borrowing base
properties of the facility, a minimum borrowing base debt service coverage ratio and a minimum
borrowing base debt yield. As of March 31, 2011, $100.8 million was available for us to borrow
under the facility. Our ability to borrow under the facility is subject to ongoing compliance
with a number of customary restrictive covenants, including:

 a maximum leverage ratio (defined as consolidated total indebtedness to total gross asset
value) of 55%;

 a maximum recourse debt ratio (defined as recourse indebtedness other than indebtedness
under the revolving credit facility to gross asset value) of 30%; and

 a minimum tangible net worth equal to at least 75% of our tangible net worth at the
closing of our IPO plus 80% of the net proceeds of any additional equity issuances.

427 S. LaSalle

As of March 31, 2011, the 427 S. LaSalle property had a senior mortgage loan, subordinate
mortgage loan and mezzanine loan payable of $25.0 million, $5.0 million and $10.0 million,
respectively, which mature on March 9, 2012. These loans are secured by deeds of trust on the
property and require payments of interest only until maturity. The mortgage requires ongoing
compliance by us with various nonfinancial covenants. As of March 31, 2011, the Company was in
compliance with the covenants.

On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S. LaSalle
property at a discount. As a result of this discounted payoff, we reduced our debt by $10.0
million, paying $9.5 million in cash and recognizing a $0.5 million gain, net of fees on the
transaction.

55 S. Market

As of March 31, 2011, the 55 S. Market property had a $60.0 million mortgage loan, which
matures on October 9, 2012. The mortgage payable contains one two-year extension option provided
the Company meets certain financial and other customary conditions and subject to the payment of
an extension fee equal to 60 basis points. The loan bears interest at LIBOR plus 350 basis points
and requires the payment of interest only until maturity. The mortgage requires ongoing
compliance by us with various covenants including liquidity and net operating income covenants.
As of March 31, 2011, the Company was in compliance with the covenants.

As of March 31, 2011, the 12100 Sunrise Valley property had a mortgage loan payable of $25.6
million. We may make additional draws of up to $6.4 million to fund specified construction under
the loan agreement for a maximum total borrowing of $32.0 million. The mortgage loan payable is
secured by the 12100 Sunrise Valley property and requires payments of interest only until the
amortization commencement date on July 1, 2011. The loan matures on June 1, 2013 and we may
exercise the one remaining one-year extension option provided the Company meets certain financial
and other customary conditions and subject to the payment of an extension fee equal to 50 basis
points. The mortgage loan payable contains certain financial and nonfinancial covenants. As of
March 31, 2011, the Company was in compliance with the covenants.

Debt Maturities

The following table summarizes our debt maturities as of March 31, 2011 (in thousands):

Year

2011

$

132

2012

100,277

(1)

2013

25,151

Total

$

125,560

(1)

On April 29,
2011, the Company repaid
the $10.0 million
mezzanine loan on the 427
S. LaSalle property which
was scheduled to mature
on March 9, 2012.

6. Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and
economic conditions. The Company principally manages its exposures to a wide variety of business
and operational risks through management of its core business activities. The Company manages
economic risks, including interest rate, liquidity, and credit risk primarily by managing the
amount, sources, and duration of its debt funding and the use of derivative financial
instruments. Specifically, the Company enters into derivative financial instruments to manage
exposures that arise from business activities that result in the receipt or payment of future
known and uncertain cash amounts, the value of which are determined by interest rates. The
Companys derivative financial instruments are used to manage differences in the amount, timing,
and duration of the Companys known or expected cash receipts and its known or expected cash
payments principally related to the Companys investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

The Companys objectives in using interest rate derivatives are to add stability to interest
expense and to manage its exposure to interest rate movements. To accomplish this objective, the
Company primarily uses interest rate swaps and caps as part of its interest rate risk management
strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable
amounts from a counterparty in exchange for the Company making fixed-rate payments over the life
of the agreements without exchange of the underlying notional amount. Interest rate caps
designated as cash flow hedges involve the receipt of variable amounts from a counterparty if
interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of derivatives designated and that
qualify as cash flow hedges is recorded in accumulated other comprehensive income and is
subsequently reclassified into earnings in the period that the hedged forecasted transaction
affects earnings. During the period, such derivatives were used to hedge the variable cash flows
associated with existing variable-rate debt. The ineffective portion of the change in fair value
of the derivatives is recognized directly in earnings. During the three months ended March 31,
2011 and 2010, the Company did not record any amount in earnings related to derivatives due to
hedge ineffectiveness.

Amounts reported in accumulated other comprehensive income related to derivatives will be
reclassified to interest expense as interest payments are made on the Companys variable-rate
debt. During 2011, the Company estimates that an additional $0.1 million will be reclassified as
an increase to interest expense.

As of March 31, 2011, the Company had the following outstanding interest rate derivatives
that were designated as cash flow hedges of interest rate risk:

Cash Flow Hedge Derivative Summary

Number of

Instruments

Notional

Derivative type

Interest rate swap

1

$

60,000,000

Interest rate cap

1

25,000,000

Total

2

$

85,000,000

Non-designated Hedges

Additionally, the Company does not use derivatives for trading or speculative purposes.
Derivatives not designated as hedges are not speculative and are used to manage the Companys
exposure to interest rate movements but due to immateriality, are not designated for hedge
accounting purposes. The Companys derivatives detailed in the table below are not designated as
hedging instruments for accounting purposes and do not have material economic value as of March
31, 2011. Changes in the fair value of derivatives not designated in hedging relationships are
recorded directly in earnings. As of March 31, 2011, the Company had the following outstanding
derivatives that were not designated as hedges in qualifying hedging relationships:

Non-Designated Derivative Summary

Number of

Instruments

Notional

Derivative type

Interest rate caps

3

$

73,165,000

Total

3

$

73,165,000

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Companys derivative financial instruments as
well as their classification on the balance sheet as of March 31, 2011 and December 31, 2010.

Tabular Disclosure of the Effect of Derivative Instruments on the Income Statement

The table below presents the effect of the Companys derivative financial instruments on the
statement of operations for the three months ended March 31, 2011 and 2010 (in thousands).

Income Statement Impact of Derivatives in Cash Flow Hedging Relationships

Amount of Gain or (Loss) Recognized in

Amount of Gain or (Loss) Reclassified from

Location of Gain or (Loss)

Income on Derivative (Ineffective Portion

Amount of Gain or (Loss) Recognized in

Location of Gain or (Loss)

Accumulated OCI into Income (Effective

Recognized in Income on

and Amount Excluded from Effectiveness

OCI on Derivative (Effective Portion) for

Reclassified from Accumulated

Portion) for the Three Months Ended

Derivative (Ineffective Portion

Testing) for the Three Months Ended

the Three Months Ended March 31,

OCI into Income (Effective

March 31,

and Amount Excluded from

March 31,

2011

2010

Portion)

2011

2010

Effectiveness Testing)

2011

2010

Interest rate
derivatives

Interest rate caps

$

(13

)

$



Interest income / (expense)

$



$



Other income / (expense)

$



$



Interest rate swap

(52

)



Interest income / (expense)

37



Other income / (expense)





Total

$

(65

)

$



$

37

$



$



$



Credit-Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a
provision under which if the Company defaults on any of its indebtedness, including default when
repayment of the indebtedness has not been accelerated by the lender, the Company could also be
declared in default on its derivative obligations. Such a default may require the Company to
settle any outstanding derivatives at their then current fair value. However, as of March 31,
2011, the Company did not have any derivatives with fair values in a net liability position.
Accordingly, had the Company breached this provision at March 31, 2011, it would not have been
required to make any payments to its counterparties in order to settle its outstanding derivative
agreements. The Company has not posted any cash collateral related to these agreements.

7. Noncontrolling Interests  Operating Partnership

Noncontrolling interests represent the limited partnership interests in the Operating
Partnership held by individuals and entities other than CoreSite Realty Corporation. Commencing
on the first anniversary of the IPO, the Operating Partnership units will be eligible to be
redeemed for cash or, at our option, exchangeable into our common stock on a one-for-one basis.
We have evaluated whether we control the actions or events necessary to issue the maximum number
of shares that could be required to be delivered under the share settlement of the Operating
Partnership units. Based on the results of this analysis, we concluded that the Operating
Partnership units met the criteria to be classified within equity at March 31, 2011.

The following table shows the ownership interest in the Operating Partnership as of March
31, 2011:

Number of Units

Percentage of Total

The Company

19,458,605

42.6

%

Noncontrolling interests consist of:

Common units held by third parties

26,165,000

57.3

%

Incentive units held by employees

61,065

0.1

%

Total

45,684,670

100.0

%

The redemption value of the noncontrolling interests at March 31, 2011 was $415.4 million
based on the closing price of the Companys stock of $15.84 on that date.

8. Stockholders Equity

During the three months ended March 31, 2011, we issued 242,397 shares of restricted stock
and 495,804 stock options to certain employees that vest evenly over four years.

On March 15, 2011, we declared a regular cash dividend for the first quarter of 2011 of
$0.13 per common share payable on April 15, 2011 to stockholders of record as of March 31, 2011.
In addition, holders of Operating Partnership units also received a distribution of $0.13 per
unit. We recorded a payable as of March 31, 2011 of $6.0 million for this dividend and
distribution.

9. Equity Incentive Plan

In connection with our initial public offering, the Companys Board of Directors adopted the
2010 equity incentive plan, which we refer to as the 2010 Plan. The 2010 Plan is administered by
the Board of Directors, or the plan administrator. Awards issuable under the 2010 Plan include
common stock, stock options, restricted stock, stock appreciation rights, dividend equivalents
and other incentive awards. We have reserved a total of 3,000,000 shares of our common stock for
issuance pursuant to the 2010 Plan, which may be adjusted for changes in our capitalization and
certain corporate transactions. To the extent that an award expires, terminates or lapses, or an
award is settled in cash without the delivery of shares of common stock to the participant, then
any unexercised shares subject to the award will be available for future grant or sale under the
2010 Plan. Shares of restricted stock which are forfeited or repurchased by us pursuant to the
2010 Plan may again be optioned, granted or awarded under the 2010 Plan. The payment of dividend
equivalents in cash in conjunction with any outstanding awards will not be counted against the
shares available for issuance under the 2010 Plan.

Stock option awards are granted with an exercise price equal to the closing market price of
the Companys common stock at the date of grant. The fair value of each option granted under the
2010 Plan is estimated on the date of the grant using the Black-Scholes option-pricing model. For
the three months ended March 31, 2011, 495,804 stock options were granted. The fair values are
being expensed on a straight-line basis over the vesting periods.

The following table sets forth the 2010 Plans stock option activity for the three months
ended March 31, 2011:

Number of

Weighted

Shares Subject to

Average Exercise

Option

Price

Options outstanding, December 31, 2010

587,555

$

16.00

Granted

495,804

15.18

Forfeited

(31,183

)

16.00

Exercised





Options outstanding, March 31, 2011

1,052,176

$

15.61

The following table sets forth the number of shares subject to option that are unvested as
of March 31, 2011 and the fair value of these options at the grant date:

Weighted

Number of

Average Fair

Shares Subject to

Value at Grant

Option

Date

Unvested balance, December 31, 2010

587,555

$

4.95

Granted

495,804

4.87

Forfeited

(31,183

)

4.95

Exercised





Unvested balance, March 31, 2011

1,052,176

$

4.91

As of March 31, 2011, total unearned compensation on options was approximately $4.1 million,
and the weighted average vesting period was 3.7 years.

Restricted Awards

During the three months ended March 31, 2011, the Company issued 242,397 shares of
restricted stock, which had a value of $3.6 million on the grant date. Additionally, the Company
issued 92 restricted stock units, or RSUs. The principal difference between these instruments is
that RSUs are not shares of CoreSite Realty Corporation common stock and do not have any of the
rights or privileges thereof, including voting rights. On the applicable vesting date, the holder
of an RSU becomes entitled to a share of common stock. The restricted awards will be amortized on
a straight-line basis to expense over the vesting period. The following table sets forth the
number of unvested restricted awards and the weighted average fair value of these awards at the
date of grant:

As of March 31, 2011, total unearned compensation on restricted awards was approximately
$5.3 million, and the weighted average vesting period was 3.4 years.

Operating Partnership Units

In connection with the Companys IPO, we issued 25,883 Operating Partnership units, which
were fair valued at $15.98 per unit or $0.4 million in total. The Operating Partnership units
will be amortized on a straight-line basis to expense over the vesting period. As of March 31,
2011, total unearned compensation on Operating Partnership units was approximately $0.3 million,
and the weighted average vesting period was 2.5 years.

10. Earnings Per Share

Basic loss per share is calculated by dividing the net loss attributable to controlling
interests by the weighted average number of common shares outstanding during the period. Diluted
loss per share adjusts basic loss per share for the effects of potentially dilutive common
shares, if the effect is not antidilutive. Potentially dilutive common shares consist of shares
issuable under our equity-based compensation plan and Operating Partnership units. For the three
months ended March 31, 2011, 1,052,176 stock
options and 421,995 restricted shares have been excluded from the calculation of diluted
earnings per share as their effect would have been antidilutive.

11. Estimated Fair Value of Financial Instruments

Authoritative guidance issued by the Financial Accounting Standards Board establishes a
hierarchy of valuation techniques based on the observability of inputs utilized in measuring
assets and liabilities at fair values. This hierarchy establishes market-based or observable
inputs as the preferred source of values, followed by valuation models using management
assumptions in the absence of market inputs. The three levels of the hierarchy under the
authoritative guidance are as follows:

Level 2  Inputs are quoted prices for similar assets or liabilities in an active market,
quoted prices for identical or similar assets or liabilities in markets that are not active,
inputs other than quoted prices that are observable, and market-corroborated inputs which are
derived principally from or corroborated by observable market data.

Level 3  Inputs are derived from valuation techniques in which one or more significant
inputs or value drivers are unobservable.

The combined balance of our mortgage loans payable was $125.6 million and $125.6 million
(excluding a $0.7 million fair value of acquired debt adjustment) as of March 31, 2011 and
December 31, 2010, respectively, with a fair value of $124.6 million and $123.8 million,
respectively, based on Level 3 inputs from the fair value hierarchy. The fair values of mortgage
notes payable are based on the Companys assumptions of interest rates and terms available
incorporating the Companys credit risk.

Measurements of asset retirement obligations upon initial recognition are based on Level 3
inputs. The significant unobservable inputs to this fair value measurement include estimates of
remediation costs, inflation rate, market risk premium and the expected timing of development or
redevelopment. The inputs are derived based on historical data as well as managements best
estimate of current costs.

Derivative financial instruments

Currently, the Company uses interest rate swaps to manage interest rate risk. The fair
values of interest rate swaps are determined using the market standard methodology of netting the
discounted future fixed cash receipts (or payments) and the discounted expected variable cash
payments (or receipts). The variable cash payments (or receipts) are based on the expectation of
future interest rates (forward curves) derived from observed market interest rate curves. In
addition, to comply with the provisions of FASB ASC 820, credit valuation adjustments, which
consider the impact of any credit risk to the contracts, are incorporated in the fair values to
account for potential nonperformance risk. In adjusting the fair value of its derivative
contracts for the effect of nonperformance risk, the Company has considered any applicable credit
enhancements such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its
derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments
associated with its derivatives utilize Level 3 inputs, such as estimates of current credit
spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as
of March 31, 2011, the Company has assessed the significance of the impact of the credit
valuation adjustments on the overall valuation of its derivative positions and has determined
that the credit valuation adjustment is not significant to the overall valuation of its
derivative portfolios. As a result, the Company classifies its derivative valuations in Level 2
of the fair value hierarchy.

The table below presents the Companys assets and liabilities measured at fair value on a
recurring basis as of March 31, 2011 and December 31, 2010, aggregated by the level in the fair
value hierarchy within which those measurements fall.

Recurring Fair Value Measurements

Quoted Prices in Active Markets for

Identical Assets and Liabilities

Significant Other Observable Inputs

Significant Unobservable Inputs

(Level 1)

(Level 2)

(Level 3)

Total Fair Value

As of March 31,

As of December 31,

As of March 31,

As of December 31,

As of March 31,

As of December 31,

As of March 31,

As of December 31,

2011

2010

2011

2010

2011

2010

2011

2010

(In thousands)

Assets

Derivative Financial Instruments

$



$



$

121

$

148

$



$



$

121

$

148

Liabilities

Derivative Financial Instruments

$



$



$



$



$



$



$



$



12. Related Party Transactions

Prior to the closing of the IPO on September 28, 2010, CoreSite, LLC was engaged to act as
the Companys agent for the purpose of coordinating the activities of the property manager, for
leasing and servicing the properties, and for overseeing property
build-out activities. Subsequent to our Predecessors acquisition of CoreSite, LLC as part
of the IPO on September 28, 2010, all related party revenue and expenses incurred in connection
with CoreSite, LLCs activities have been eliminated in consolidation. For the three months ended
March 31, 2010, CoreSite, LLC earned management fees from the Predecessor of $1.1 million. For
the three months ended March 31, 2010, CoreSite, LLC earned lease commissions from our
Predecessor of $2.5 million. These commissions are included in deferred leasing costs. For the
three months ended March 31, 2010, CoreSite, LLC earned construction management fees from our
Predecessor of $0.5 million. The construction management fees are included in building
improvements and construction in progress. For the three months ended March 31, 2010, CoreSite,
LLC was reimbursed for payroll related expenses from our Predecessor of $0.4 million. At March
31, 2011 and December 31, 2010, no such fees were payable to CoreSite, LLC.

We lease 1,515 net rentable square feet of space at our 12100 Sunrise Valley property to an
affiliate of The Carlyle Group. The lease commenced on July 1, 2008 and expires on June 30, 2013.
Rental revenue was less than $0.1 million and $0.3 million for the three months ended March 31,
2011 and 2010, respectively.

13. Commitments and Contingencies

The Company currently leases the data center space under noncancelable operating lease
agreements at 32 Avenue of the Americas, One Wilshire and 1275 K Street, and the Company leases
its headquarters located in Denver, Colorado under a noncancelable operating lease agreement. The
lease agreements provide for base rental rate increases at defined intervals during the term of
the lease. In addition, the Company has negotiated rent abatement periods to better match the
phased build-out of the data center space. The Company accounts for such abatements and
increasing base rentals using the straight-line method over the noncancelable term of the lease.
The difference between the straight-line expense and the cash payment is recorded as deferred
rent payable.

Additionally, the Company has commitments related to telecommunications capacity used to
connect data centers located within the same market or geographical area and power usage.

The future minimum payments to be made under noncancelable leases, telecommunications
capacity commitments and power usage commitments as of March 31, 2011 are as follows (in
thousands):

Remainder of

2011

2012

2013

2014

2015

Thereafter

Total

Operating leases

$

12,513

$

17,044

$

17,457

$

17,742

$

17,620

$

44,255

$

126,631

Other(1)

2,209

2,181

278

151

104

189

5,112

Total

$

14,722

$

19,225

$

17,735

$

17,893

$

17,724

$

44,444

$

131,743

(1)

Obligations for tenant improvement work at 55 S. Market Street, power contracts and telecommunications leases.

Rent expense for the three months ended March 31, 2011 and 2010 was $4.5 million and $0.7
million, respectively.

Our properties require periodic investments of capital for general capital improvements and
for tenant related capital expenditures. Additionally, the Company enters into various
construction contracts with third parties for the development and redevelopment of our
properties. At March 31, 2011, we had open commitments related to construction contracts of
approximately $21.0 million.

As previously disclosed, the Company is involved in litigation in Colorado District Court in
Denver with Ari Brumer, the former general counsel of its affiliate CoreSite, LLC, arising out of
the termination of Mr. Brumers employment. Mr. Brumer alleges that he was fraudulently induced
to accept employment with CoreSite, LLC, and that his employment was terminated in retaliation
for his assertions of illegal or improper acts by the Company or its affiliates. The Company has
filed counterclaims against Mr. Brumer based on his intentional disruption of the Companys
initial public offering for personal advantage after his employment was terminated. The court
previously dismissed one of Mr. Brumers claims as legally insufficient and, on April 27, 2011,
confirmed the dismissal with prejudice of all his claims against the Companys chief executive
officer individually.

Because the case is still in the preliminary stages, the cost of the litigation and its
ultimate resolution are not estimable at this time. The Company believes that it has valid
defenses to Mr. Brumers remaining claims and that there is significant merit to its
counterclaims against Mr. Brumer. The Company intends to vigorously defend the case and pursue
its counterclaims against Mr.
Brumer. Based on the claims and damages asserted and the probability of an unfavorable
outcome, the Company believes that the litigation will not have a material adverse effect on its
business, financial position or liquidity.

From time to time, the Company may have certain contingent liabilities that arise in the
ordinary course of its business activities. Management believes that the resolution of such
matters will not have a material adverse effect on the financial position, results of operations
or cash flows of the Company.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q, (this Quarterly Report), together with other
statements and information publicly disseminated by our company contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act). We intend such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 and includes this statement for purposes of complying with these safe harbor
provisions.

In particular, statements pertaining to our capital resources, portfolio performance and
results of operations contain forward-looking statements. You can identify forward-looking
statements by the use of forward-looking terminology such as believes, expects, may,
will, should, seeks, intends, plans, pro forma or anticipates or the negative of
these words and phrases or similar words or phrases that are predictions of or indicate future
events or trends and that do not relate solely to historical matters. You can also identify
forward-looking statements by discussions of strategy, plans or intentions. Such statements are
subject to risks, uncertainties and assumptions and are not guarantees of future performance,
which may be affected by known and unknown risks, trends, uncertainties and factors that are
beyond our control. Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected. The following factors, among others, could cause actual
results and future events to differ materially from those set forth or contemplated in the
forward-looking statements: (i) the geographic concentration of our data centers in certain
markets and any adverse developments in local economic conditions or the demand for data center
space in these markets; (ii) fluctuations in interest rates and increased operating costs; (iii)
difficulties in identifying properties to acquire and completing acquisitions; (iv) the
significant competition in our industry and an inability to lease vacant space, renew existing
leases or release space as leases expire; (v) lack of sufficient customer demand to realize
expected returns on our investments to expand our property portfolio; (vi) decreased revenue from
costs and disruptions associated with any failure of our physical infrastructure or services;
(vii) our ability to lease available space to existing or new customers; (viii) our failure to
obtain necessary outside financing; (ix) our failure to qualify or maintain our status as a REIT;
(x) financial market fluctuations; (xi) changes in real estate and zoning laws and increases in
real property tax rates; (xii delays or disruptions in third-party network connectivity; (xiii)
inability to renew net leases on the data center properties we lease and (xiv) other factors
affecting the real estate industry generally.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of
future performance. We disclaim any obligation to publicly update or revise any forward-looking
statement to reflect changes in underlying assumptions or factors, of new information, data or
methods, future events or other changes. The risks included here are not exhaustive, and
additional factors could adversely affect our business and financial performance, including
factors and risks included in other sections of this Quarterly Report. Additional information
concerning these and other risks and uncertainties is contained in our other periodic filings
with the United States Securities and Exchange Commission, or SEC, pursuant to the Exchange Act.
In addition, we discussed a number of material risks in our annual report on Form 10-K for the
year ended December 31, 2010. Those risks continue to be relevant to our performance and
financial condition. Moreover, we operate in a very competitive and rapidly changing environment.
New risk factors emerge from time to time and it is not possible for management to predict all
such risk factors, nor can it assess the impact of all such risk factors on our companys
business or the extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements. Given these risks
and uncertainties, investors should not place undue reliance on forward-looking statements as a
prediction of actual results.

Overview

Unless the context requires otherwise, references in this Quarterly Report to we, our,
us and our company refer to CoreSite Realty Corporation, a Maryland corporation, together
with its consolidated subsidiaries, including CoreSite, L.P., a Delaware limited partnership of
which CoreSite Realty Corporation is the sole general partner and which we refer to in this
Quarterly Report as our Operating Partnership, and CoreSite Services, Inc., a Delaware
corporation, our taxable REIT subsidiary, or TRS.

We formed CoreSite Realty Corporation as a Maryland corporation on February 17, 2010, with
perpetual existence. Through our controlling interest in our Operating Partnership, we are
engaged in the business of ownership, acquisition, construction and management of strategically
located data centers in some of the largest and fastest growing data center markets in the United
States, including Los Angeles, the San Francisco Bay and Northern Virginia areas, Chicago and New
York City. Our high-quality data centers feature ample and redundant power, advanced cooling and
security systems and many are points of dense network interconnection. We will elect to be taxed
as a REIT under the Internal Revenue Code of 1986, as amended (the Code), commencing with our
taxable year ending December 31, 2010 upon filing our federal income tax return for such year.

On September 28, 2010, we completed our initial public offering (the IPO), which resulted
in the sale of 19,435,000 shares of our common stock, including 2,535,000 shares as a result of
the underwriters exercising their over-allotment option, at a price per
share of $16.00, generating gross proceeds to the Company of $311.0 million. The proceeds to
the Company, net of underwriters discounts, commissions and other offering costs were $285.6
million. Upon completion of the IPO, our Operating Partnership used the proceeds to enter into
various formation transactions and acquire 100% of the ownership interests in the entities that
owned our Predecessor and the CoreSite Acquired Properties from certain real estate funds (the
Funds) affiliated with The Carlyle Group (Carlyle).

Our Portfolio

As of March 31, 2011, our property portfolio included 11 operating data center facilities,
one data center under construction and one development site, which collectively comprise over 2.0
million net rentable square feet (NRSF), of which approximately 1.1 million NRSF is existing
data center space. These properties include 278,459 NRSF of space readily available for lease, of
which 185,388 NRSF is available for lease as data center space. As of March 31, 2011, we had the
ability to expand our operating data center square footage by
973,590 NRSF, or 86.2%, through the development or redevelopment of
(1) 102,686 NRSF of data center space currently under construction,
(2) 326,820 NRSF of office and industrial space currently available for redevelopment, (3) 148,234 NRSF of currently
operating space targeted for future redevelopment, comprised of 45,283 NRSF of office space and 102,951 NRSF of data center space targeted for upgrade
to more robust specifications, and (4) 395,850 NRSF of new data center space that can be developed on land that the Company
currently owns at its Coronado-Stender properties.
We expect that this redevelopment and development potential plus any potential expansion
into new markets will enable us to accommodate existing and future customer demand and positions
us to significantly increase our cash flows. We will pursue redevelopment and development
projects and expansion into new markets when we believe those opportunities support the
additional supply in those markets.

The following table provides an overview of our data center leasing activity during the three
months ended March 31, 2011:

NRSF

Total leases signed but not yet commenced as of January 1, 2011

39,266

Leases signed during the three months ended March 31, 2011

42,583

New leases signed during the three months ended March 31, 2011 which have commenced

(22,649

)

Leases signed in previous periods which commenced during the three months ended March 31, 2011

The following table provides an overview of our properties as of March 31, 2011:

NRSF

Operating(1)

Office and Light-

Data Center(2)

Industrial(3)

Total

Redevelopment and Development(4)

Acquisition

Annualized

Percent

Percent

Percent

Under

Total

Market/Facilities

Date(5)

Rent ($000)(6)

Total

Leased(7)

Total

Leased(7)

Total(8)

Leased(7)

Construction(9)

Vacant

Total

Portfolio

Los Angeles

One Wilshire*

Aug. 2007

$

20,109

156,521

64.2

%

7,500

54.6

%

164,021

63.8

%







164,021

900 N. Alameda

Oct. 2006

12,884

281,078

90.8

8,360

14.9

289,438

88.6



144,721

144,721

434,159

Los Angeles Total

32,993

437,599

81.3

15,860

33.7

453,459

79.6



144,721

144,721

598,180

San Francisco Bay

55 S. Market

Feb. 2000

11,091

84,045

88.7

205,846

85.0

289,891

86.1







289,891

2901 Coronado

Feb. 2007

8,820

50,000

100.0





50,000

100.0







50,000

1656 McCarthy

Dec. 2006

7,083

76,676

82.7





76,676

82.7







76,676

Coronado-Stender Properties(10)

Feb. 2007

681





78,800

74.3

78,800

74.3



50,400

50,400

129,200

2972 Stender(11)

Feb. 2007















50,400



50,400

50,400

San Francisco Bay Total

27,675

210,721

89.2

284,646

82.1

495,367

85.1

50,400

50,400

100,800

596,167

Northern Virginia

12100 Sunrise Valley

Dec. 2007

11,421

116,498

96.8

60,539

66.2

177,037

86.3

52,286

33,446

85,732

262,769

1275 K Street*

June 2006

1,875

22,137

85.1





22,137

85.1







22,137

Northern Virginia Total

13,296

138,635

94.9

60,539

66.2

199,174

86.2

52,286

33,446

85,732

284,906

Chicago

427 S. LaSalle

Feb. 2007

6,631

129,790

78.3

45,283

100.0

175,073

83.9



5,309

5,309

180,382

Boston

70 Innerbelt

Apr. 2007

6,580

133,646

85.5

13,063

15.4

146,709

79.2



129,897

129,897

276,606

New York

32 Avenue of the Americas*

June 2007

4,291

48,404

76.1





48,404

76.1







48,404

Miami

2115 NW 22nd Street

June 2006

1,334

30,176

51.9

1,641

100.0

31,817

54.4



13,447

13,447

45,264

Total Facilities

$

92,800

1,128,971

83.6

%

421,032

77.9

%

1,550,003

82.0

%

102,686

377,220

479,906

2,029,909

*

Indicates properties in which we hold a leasehold interest.

(1)

Represents the square feet at each building under lease as specified in existing customer lease
agreements plus managements estimate of space available for lease to customers based on engineers
drawings and other factors, including required data center support space (such as the mechanical,
telecommunications and utility rooms) and building common areas. Total NRSF at a given facility
includes the total operating NRSF and total redevelopment and development NRSF, but excludes our
office space at a facility and our corporate headquarters.

(2)

Represents the NRSF at each operating facility that is currently leased or readily available
for lease as data center space. Both leased and available data center NRSF include a customers
proportionate share of the required data center support space (such as the mechanical,
telecommunications and utility rooms) and building common areas.

(3)

Represents the NRSF at each operating facility that is currently leased or readily available
for lease as space other than data center space, which is typically space offered for office or
light-industrial uses.

(4)

Represents vacant space in our portfolio that requires significant capital investment in order
to redevelop or develop into data center facilities. Total redevelopment and development NRSF and
total operating NRSF represent the total NRSF at a given facility.

(5)

Reflects date property was acquired by the Funds or their affiliates and not the date of our
acquisition upon consummation of our initial public offering. In the case of a leased property,
indicates the date the initial lease commenced.

(6)

Represents the monthly contractual rent under existing customer leases as of March 31, 2011
multiplied by 12. This amount reflects total annualized base rent before any one-time or
non-recurring rent abatements and, for any customer under a modified gross or triple-net lease, it
excludes the operating expense reimbursement attributable to such lease. On a gross basis, our
annualized rent was approximately $99,371,000 as of March 31, 2011, which reflects the addition of
$6,571,000 in operating expense reimbursements to contractual net rent under modified gross and
triple-net leases.

(7)

Includes customer leases that have commenced as of March 31, 2011. The percent leased is
determined based on leased square feet as a proportion of total operating NRSF.

(8)

Represents the NRSF at an operating facility currently leased or readily available for lease.
This excludes existing vacant space held for redevelopment or development.

(9)

Reflects NRSF for which substantial activities are ongoing to prepare the property for its
intended use following redevelopment or development, as applicable. The entire 102,686 NRSF under
construction as of March 31, 2011 was data center space.

(10)

The Coronado-Stender properties became entitled for our proposed data center development upon
receipt of the mitigated negative declaration from the city of Santa Clara in the first quarter of
2011. We have the ability to develop 345,250 NRSF of data center space at this property, which is
in addition to the 50,400 NRSF of data center space and 50,600 NRSF of unconditioned core and shell
space under construction at 2972 Stender.

(11)

We are under construction on 50,400 NRSF of data center space at this property. We are also
developing an incremental 50,600 NRSF of unconditioned core and shell space held for potential
future development into data center space, subject to our assessment of market demand and
alternative uses of our capital.

The following table shows the March 31, 2011 operating statistics for space that was
leased and available to be leased as of June 30, 2010 at each of our properties, and excludes space
for which development or redevelopment was completed and became available to be leased after June
30, 2010. For comparison purposes, the operating activity totals at December 31, 2010 and June 30,
2010 for this space is provided at the bottom of this table.

Operating NRSF

Office and Light-

Data Center

Industrial

Total

Annualized

Percent

Percent

Percent

Market/Facilities

Acquisition Date

Rent ($000)

Total

Leased

Total

Leased

Total

Leased

Los Angeles

One Wilshire*

Aug. 2007

$

20,109

156,521

64.2

%

7,500

54.6

%

164,021

63.8

%

900 N. Alameda

Oct. 2006

12,689

264,952

95.3

8,360

14.9

273,312

92.9

Los Angeles Total

32,798

421,473

83.8

15,860

33.7

437,333

81.9

San Francisco Bay

55 S. Market

Feb. 2000

11,091

84,045

88.7

205,846

85.0

289,891

86.1

2901 Coronado

Feb. 2007

8,820

50,000

100.0





50,000

100.0

1656 McCarthy

Dec. 2006

7,083

71,847

88.2





71,847

88.2

Coronado-Stender Properties

Feb. 2007

681





78,800

74.3

78,800

74.3

2972 Stender

Feb. 2007















San Francisco Bay Total

27,675

205,892

91.3

284,646

82.1

490,538

85.9

Northern Virginia

12100 Sunrise Valley

Dec. 2007

11,265

116,498

96.6

38,350

90.5

154,848

95.1

1275 K Street*

June 2006

1,875

22,137

85.1





22,137

85.1

Northern Virginia Total

13,140

138,635

94.8

38,350

90.5

176,985

93.9

Chicago

427 S. LaSalle

Feb. 2007

6,631

129,790

78.3

45,283

100.0

175,073

83.9

Boston

70 Innerbelt

Apr. 2007

6,305

119,567

94.7

2,024

63.5

121,591

94.1

New York

32 Avenue of the Americas*

June 2007

4,291

48,404

76.1





48,404

76.1

Miami

2115 NW 22nd Street

June 2006

1,334

30,176

51.9

1,641

100.0

31,817

54.4

Total Facilities at
March 31, 2011 (1)

$

92,174

1,093,937

85.9

%

387,804

83.0

%

1,481,741

85.1

%

Total Facilities at December 31, 2010

$

89,225

83.1

%

83.1

%

83.1

%

Total Facilities at June 30, 2010

$

85,695

82.4

%

78.2

%

81.3

%

*

Indicates properties in which we hold a leasehold interest.

(1) The percent leased for data center space, office and light
industrial space, and space in total would have been 88.2%, 85.4%,
and 87.5%, respectively, if all leases signed in current and prior
periods had commenced.

The following table summarizes the redevelopment and development opportunities
throughout our portfolio as of March 31, 2011:

Redevelopment NRSF

Currently Vacant

Currently Operating

Under

Near-

Long-

Near-

Long-

Incremental

Facilities

Construction(1)

Term(2)

Term

Total

Term(2)

Term

Total

Entitled

Total

Los Angeles

One Wilshire*



















900 N. Alameda(3)



25,000

119,721

144,721



102,951

102,951



247,672

Los Angeles Total



25,000

119,721

144,721



102,951

102,951



247,672

San Francisco Bay

55 S. Market



















2901 Coronado



















1656 McCarthy



















San Francisco Bay Total



















Northern Virginia

12100 Sunrise Valley(4)

52,286

33,446



85,732









85,732

1275 K Street*



















Northern Virginia Total

52,286

33,446



85,732









85,732

Chicago

427 S. LaSalle(5)





5,309

5,309

22,000

23,283

45,283



50,592

Boston

70 Innerbelt(3)



17,500

112,397

129,897









129,897

New York

32 Avenue of the Americas*



















Miami

2115 NW 22nd Street





13,447

13,447









13,447

Total Redevelopment

52,286

75,946

250,874

379,106

22,000

126,234

148,234



527,340

Development NRSF

Currently Vacant

Currently Operating

Under

Near-

Long-

Near-

Long-

Incremental

Facilities

Construction(1)

Term(2)

Term

Total

Term(2)

Term

Total

Entitled

Total

San Francisco Bay

Coronado-Stender Properties(6)





50,400

50,400



78,800

78,800

216,050

345,250

2972 Stender(7)

50,400





50,400







50,600

101,000

Total Development

50,400



50,400

100,800



78,800

78,800

266,650

446,250

Total Facilities

102,686

75,946

301,274

479,906

22,000

205,034

227,034

266,650

973,590

*

Indicates properties in which we hold a leasehold interest.

(1)

Reflects NRSF at a facility for which the initiation of substantial activities to prepare the
property for its intended use following redevelopment or development, as applicable, has commenced
prior to the applicable period.

(2)

Reflects NRSF at a facility for which the initiation of substantial activities to prepare the
property for its intended use following redevelopment or development, as applicable, is planned to
commence after March 31, 2011 but prior to March 31, 2012.

(3)

The NRSF shown is our current estimate based on engineering drawings and required support space
and is subject to change based on final demising of the space.

(4)

The remaining 85,732 NRSF of vacant space will be redeveloped into data center space in two
phases. The first phase commenced in the fourth quarter of 2010 and is expected to cost
approximately $30.5 million.

(5)

We plan to redevelop 22,000 NRSF on the fifth floor to data center space immediately following
the expiration of an existing office lease for that space which expires April 30, 2011.

(6)

We are entitled to develop up to 345,250 NRSF of data center space at this property, or an
incremental 216,050 NRSF, which is in addition to the leased and vacant NRSF existing at the
property. This is in addition to the 50,400 NRSF of data center space and 50,600 NRSF of
unconditioned core and shell space under construction at 2972 Stender.

(7)

As of March 31, 2011, we were under construction on 50,400 NRSF of data center space. We are
also developing an incremental 50,600 NRSF of unconditioned core and shell space that we intend to
hold for potential future development into data center space, subject to our assessment of market
demand and alternative uses of our capital.

As of March 31, 2011, our portfolio was leased to over 650 customers, many of which are
nationally recognized firms. The following table sets forth information regarding the ten largest
customers in our portfolio based on annualized rent as of March 31, 2011:

Weighted

Average

Percentage

Percentage

Remaining

Number

Total

of Total

Annualized

of

Lease

of

Leased

Operating

Rent

Annualized

Term in

Customer

Locations

NRSF(1)

NRSF(2)

($000)(3)

Rent(4)

Months(5)

1

Facebook, Inc.

3

74,112

4.8

%

$

11,554

12.5

%

54

2

General Services Administration-IRS*(6)

1

132,370

8.5

3,427

3.7

14

3

Sprint Communications Corporation(7)

3

104,785

6.8

3,260

3.5

10

4

Nuance Communications(8)

1

20,251

1.3

2,540

2.7

87

5

Verizon Communications

7

73,962

4.8

2,454

2.6

47

6

Computer Sciences Corporation

1

35,812

2.3

2,162

2.3

83

7

Govt of District of Columbia

2

16,646

1.1

2,158

2.3

28

8

Tata Communications

2

52,973

3.4

2,149

2.3

11

9

Akamai Technologies(9)

4

19,052

1.2

2,111

2.3

11

10

NBC Universal

1

17,901

1.2

1,669

1.8

16

Total/Weighted Average

547,864

35.4

%

$

33,484

36.0

%

36

*

Denotes customer using space for general office purposes.

(1)

Total leased NRSF is determined based on contractually leased square feet for leases that have
commenced on or before March 31, 2011. We calculate occupancy based on factors in addition to
contractually leased square feet, including required data center support space (such as the
mechanical, telecommunications and utility rooms) and building common areas.

(2)

Represents the customers total leased square feet divided by the total operating NRSF in the
portfolio which, as of March 31, 2011, consisted of 1,550,003 NRSF.

(3)

Represents the monthly contractual rent under existing customer leases as of March 31, 2011
multiplied by 12. This amount reflects total annualized base rent before any one-time or
non-recurring rent abatements and, for any customer under a modified gross or triple-net lease, it
excludes the operating expense reimbursement attributable to those leases.

(4)

Represents the customers total annualized rent divided by the total annualized rent in the
portfolio as of March 31, 2011, which was approximately $92,800,000.

(5)

Weighted average based on percentage of total annualized rent expiring and is as of March 31,
2011.

(6)

The data presented represents an interim lease in place that expires in May 2012. Upon
expiration of the interim lease and the substantial completion of tenant improvements by us, a new
lease that has already been executed by both parties will commence. That lease includes 119,729
NRSF with a ten year term and a termination option at the end of year eight.

(7)

Sprints 102,951 NRSF lease at 900 N. Alameda is scheduled to expire in the fourth quarter of
2011. We do not expect the customer to renew this lease. Upon expiration, Sprint would no longer
rank in the top 10 among our customers.

(8)

In the first quarter of 2011, we signed an additional lease with the customer that commences in
the second quarter of 2011. Upon stabilization of that lease, Nuance Communications will lease
25,404 NRSF at an annualized rent of $3,153,000.

(9)

In the third quarter of 2010, we signed two additional leases with the customer that commenced
in the fourth quarter of 2010. Upon stabilization of those leases, Akamai will be our fifth
largest customer in terms of annualized rent, with 28,336 NRSF leased and an annualized rent of
$3,124,000.

The following table sets forth information relating to the distribution of leases in the
properties in our portfolio, based on NRSF (excluding space held for redevelopment or
development) under lease as of March 31, 2011:

Total

Percentage

Percentage

Number

Percentage

Operating

of Total

Annualized

of

of

of All

NRSF of

Operating

Rent

Annualized

Square Feet Under Lease(1)

Leases(2)

Leases

Leases(3)

NRSF

($000)(4)

Rent

Available(5)





%

278,459

18.0

%

$





%

1,000 or less

922

85.8

156,531

10.1

25,323

27.3

1,001  2,000

69

6.4

98,915

6.4

11,777

12.7

2,001  5,000

49

4.6

137,967

8.9

11,970

12.9

5,001  10,000

15

1.4

106,429

6.9

9,460

10.2

10,001  25,000

11

1.0

197,259

12.7

12,372

13.3

Greater than 25,000

9

0.8

574,443

37.0

21,898

23.6

Portfolio Total

1,075

100.0

%

1,550,003

100.0

%

$

92,800

100.0

%

(1)

Represents all leases in our portfolio, including data center and office and
light-industrial leases.

(2)

Includes leases that upon expiration will be automatically renewed, primarily on a
month-to-month basis. Number of leases represents each agreement with a customer; a lease agreement
could include multiple spaces and a customer could have multiple leases.

(3)

Represents the square feet at a building under lease as specified in the lease agreements plus
managements estimate of space available for lease to third parties based on engineers drawings
and other factors, including required data center support space (such as the mechanical,
telecommunications and utility rooms) and building common areas.

(4)

Represents the monthly contractual rent under existing customer leases as of March 31, 2011
multiplied by 12. This amount reflects total annualized base rent before any one-time or
non-recurring rent abatements and, for any customer under a modified gross or triple-net lease, it
excludes the operating expense reimbursement attributable to those leases.

(5)

Excludes approximately 379,106 vacant NRSF held for redevelopment or under construction at
March 31, 2011.

Lease Expirations

The following table sets forth a summary schedule of the expirations for leases in place as
of March 31, 2011, plus available space, for the remainder of 2011 and for each of the ten full
calendar years beginning January 1, 2012 at the properties in our portfolio. Unless otherwise
stated in the footnotes, the information set forth in the table assumes that customers exercise
no renewal options and all early termination rights.

Total

Annualized

Number

Operating

Percentage

Percentage

Annualized

Annualized

Rent Per

of

NRSF of

of Total

of

Rent Per

Rent at

Leased

Leases

Expiring

Operating

Annualized

Annualized

Leased

Expiration

NRSF at

Year of Lease Expiration

Expiring(1)

Leases

NRSF

Rent ($000)(2)

Rent

NRSF(3)

($000)(4)

Expiration(5)

Available as of March 31, 2011(6)



278,459

18.0

%

$





%

$



$



$



Remainder of 2011(7)

421

298,228

19.2

20,809

22.4

69.78

21,032

70.52

2012(8)

273

388,839

25.1

26,411

28.5

67.92

27,145

69.81

2013

203

166,327

10.7

16,472

17.7

99.03

17,707

106.46

2014

79

53,777

3.5

5,853

6.3

108.84

6,758

125.67

2015

31

60,905

3.9

2,093

2.3

34.36

2,877

47.24

2016(9)

30

92,601

6.0

7,066

7.6

76.31

8,576

92.61

2017

20

43,978

2.8

7,030

7.6

159.85

8,817

200.49

2018

9

66,045

4.3

4,982

5.4

75.43

8,086

122.43

2019

1

71,062

4.6

1,234

1.3

17.37

1,445

20.33

2020

4

6,293

0.4

322

0.3

51.17

626

99.48

2021-Thereafter

4

23,489

1.5

528

0.6

22.48

665

28.31

Portfolio Total / Weighted Average

1,075

1,550,003

100.0

%

$

92,800

100.0

%

$

72.98

$

103,734

$

81.58

(1)

Includes leases that upon expiration will be automatically renewed, primarily on a
month-to-month basis. Number of leases represents each agreement with a customer; a lease agreement
could include multiple spaces and a customer could have multiple leases.

(2)

Represents the monthly contractual rent under existing customer leases as of March 31, 2011
multiplied by 12. This amount reflects total annualized base rent before any one-time or
non-recurring rent abatements and, for any customer under a modified gross or triple-net lease, it
excludes the operating expense reimbursement attributable to those leases.

(3)

Annualized rent as defined above, divided by the square footage of leases expiring in the given
year.

(4)

Represents the final monthly contractual rent under existing customer leases as of March 31,
2011 multiplied by 12. This amount reflects total annualized base rent before any one-time or
non-recurring rent abatements and, for any customer under a modified gross or triple-net lease, it
excludes the operating expense reimbursement attributable to those leases.

(5)

Annualized rent at expiration as defined above, divided by the square footage of leases
expiring in the given year. This metric highlights the rent growth inherent in the existing base of
lease agreements.

(6)

Excludes approximately 379,106 vacant NRSF held for redevelopment or under construction at
March 31, 2011.

(7)

Includes a lease with Sprint at 900 N. Alameda for 102,951 NRSF scheduled to expire in the
fourth quarter of 2011 and a lease with a professional services company at 427 S. LaSalle for
45,283 NRSF expiring in the second quarter of 2011. We anticipate redeveloping the subject spaces
as data center space upon expiration of those leases.

(8)

Includes an office lease with General Services Administration  IRS, which is an interim lease
in place that expires on May 31, 2012. Upon the expiration of the interim lease and the substantial
completion of tenant improvements by us, a new lease that has already been executed by both parties
will commence. The new lease includes 119,729 NRSF with a ten-year term and a termination option
at the end of year eight.

(9)

Total operating NRSF of expiring leases in 2016 reflects the expiration of half of a 50,000
NRSF lease, the other half of which expires in 2017.

Prior to the formation transactions on September 28, 2010, we had no corporate activity
other than issuance of shares of common stock in connection with the initial capitalization of
our company. The results of operations for the three months ended March 31, 2010 reflect the
financial condition and operating results of our accounting predecessor, or our Predecessor,
which was comprised of the real estate activities and holdings of the Funds that contributed
properties into our portfolio in connection with the formation transactions. The results of
operations for the three months ended March 31, 2011 reflect the financial condition and results
of operations of our Predecessor, together with the CoreSite Acquired Properties which we
acquired upon completion of our initial public offering and the formation transactions on
September 28, 2010, the date of acquisition. Our results of operations may not be indicative of
our future results of operations.

Our Predecessor was comprised of the real estate activities and interconnection services of
four of our operating properties, 1656 McCarthy, 32 Avenue of the Americas, 12100 Sunrise Valley
and 70 Innerbelt, as well as the Coronado-Stender Business Park. The CoreSite Acquired Properties
include our continuing real estate operations at 55 S. Market, One Wilshire, 1275 K Street, 900
N. Alameda, 427 S. LaSalle and 2115 NW 22nd Street, as well as 1050 17th Street, a property we
lease for our corporate headquarters, which does not generate operating revenue.

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

The Company

The Predecessor

Three Months Ended

Three Months Ended

March 31, 2011

March 31, 2010

(in thousands)

Operating revenue

$

39,966

$

9,030

Operating expense

$

45,780

$

9,427

Interest Expense

$

(2,252

)

$

(509

)

Net loss

$

(7,916

)

$

(906

)

Operating Revenue. Operating revenue for the three months ended March 31, 2011 was $40.0
million. This includes rental revenue of $25.2 million, power revenue of $9.8 million, tenant
reimbursements of $1.7 million and other revenue of $3.3 million, primarily from interconnection
services. This compares to revenue of $9.0 million for the three months ended March 31, 2010. The
increase of $30.9 million was due primarily to the acquisition of the CoreSite Acquired
Properties and the placement into service and subsequent leasing of 2901 Coronado during the
second quarter of 2010.

Operating Expenses. Operating expenses for the three months ended March 31, 2011 were $45.8
million compared to $9.4 million for the three months ended March 31, 2010. The increase of $36.4
million was primarily due to the acquisition of the CoreSite Acquired Properties, the
internalization of the management function through the Predecessors acquisition of CoreSite,
LLC, our management company, and the placement into service and subsequent leasing of 2901
Coronado during the second quarter of 2010.

Interest Expense. Interest expense, including amortization of deferred financing costs, for
the three months ended March 31, 2011 was $2.3 million compared to interest expense of $0.5
million for the three months ended March 31, 2010. The increase in interest expense was due to
increased debt balances.

Net Loss. Net loss for the three months ended March 31, 2011 was $7.9 million compared to a
net loss of $0.9 million for the three months ended March 31, 2010. The increase of $7.0 million
was primarily due to the acquisition of the CoreSite Acquired Properties and the internalization
of the management function through the Predecessors acquisition of CoreSite, LLC, our management
company. These increased costs were partially offset by increased operating revenue from the
placement into service and subsequent leasing of 2901 Coronado during the second quarter of 2010
and the acquisition of the CoreSite Acquired Properties.

Factors that May Influence our Results of Operations

A complete discussion of factors that may influence our results of operations can be found
in our Annual Report on Form 10-K, filed with the SEC on March 11, 2011 pursuant to Section 15(d)
of the Exchange Act, which is accessible on the SECs website at www.sec.gov.

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

Net cash provided by operating activities was $13.2 million for the three months ended March
31, 2011, compared to $1.7 million for the prior period. The increased cash provided by operating
activities of $11.4 million was primarily due to the increased number of operating properties
acquired in connection with our IPO.

Net cash used in investing activities increased by $3.7 million to $20.2 million for the
three months ended March 31, 2011, compared to $16.6 million for the three months ended March 31,
2010. This increase was primarily due to an increase in cash paid for capital expenditures
related to redevelopment and development of data center space.

Net cash used in financing activities was $5.9 million for the three months ended March 31,
2011 compared to cash provided by financing activities of $21.9 million for the three months
ended March 31, 2010. The increase in cash used in financing activities of $27.8 million was
primarily due to a decrease in capital contributions received from the member of the Predecessor,
a decrease in proceeds received from mortgages payable and the payment of dividends and
distributions during the three months ended March 31, 2011.

Analysis of Liquidity and Capital Resources

As of March 31, 2011, we had $73.2 million of cash and equivalents, excluding $15.0 million
of restricted cash. Restricted cash primarily consists of interest bearing cash deposits required
by the terms of our loans and cash impound accounts for real estate taxes, insurance and
anticipated or contractually obligated tenant improvements as required by several of our mortgage
loans.

Our short-term liquidity requirements primarily consist of funds needed for future
distributions to stockholders and holders of our operating partnership units, interest expense,
operating costs including utilities, site maintenance costs, real estate and personal property
taxes, insurance, rental expenses and selling, general and administrative expenses and certain
recurring and non-recurring capital expenditures, including for the redevelopment and development
of data center space during the next 12 months. We expect to meet our short-term liquidity
requirements through net cash provided by operations, reserves established for certain future
payments, the net proceeds from our IPO and to the extent necessary, by incurring additional
indebtedness, including by drawing on our revolving credit facility.

Our long-term liquidity requirements primarily consist of the costs to fund the development
of the Coronado-Stender Properties, our 9.1 acre development site that houses five buildings in
Santa Clara, California, future redevelopment or development of other space in our portfolio not
currently scheduled, property acquisitions, scheduled debt maturities and recurring and
non-recurring capital improvements. We expect to meet our long-term liquidity requirements
primarily by incurring long-term indebtedness and drawing on our revolving credit facility. We
also may raise capital in the future through the issuance of additional equity securities,
subject to prevailing market conditions, and/or through the issuance of operating partnership
units.

Indebtedness

A summary of outstanding indebtedness as of March 31, 2011 and December 31, 2010 is as
follows (in thousands):

The Company can elect to have borrowings under the credit facility bear interest at a rate
per annum equal to (i) LIBOR plus 350 basis points to 400 basis points, or (ii) a base rate plus
250 basis points to 300 basis points, depending on our leverage.

(2)

On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S. LaSalle
property which was scheduled to mature on March 9, 2012.

(3)

In October 2010, we entered into an interest rate swap agreement and an interest rate cap
agreement, each as a cash flow hedge for interest incurred by these LIBOR based loans.

(4)

The mortgage contains one two-year extension option subject to the Company meeting certain
financial and other customary conditions and the payment of an extension fee equal to 60 basis
points.

In conjunction with our IPO and formation transactions, our Operating Partnership entered
into a $110.0 million senior secured revolving credit facility with a group of lenders for which
KeyBank National Association acts as the administrative agent. The revolving credit facility is
unconditionally guaranteed on an unsecured basis by CoreSite Realty Corporation. CoreSite, L.P.
acts as the parent borrower and its subsidiaries that own the real estate properties known as
1656 McCarthy, 70 Innerbelt, 2901 Coronado and 900 N. Alameda are co-borrowers under the
facility, and such real estate properties provide security for the facility. Each of the parent
borrower and the subsidiary borrowers are liable under the facility on a joint and several basis.
The facility has an initial maturity date of September 28, 2013 with a one-time extension option,
which if exercised, would extend the maturity date to March 28, 2014. The exercise of the
extension option is subject to the payment of an extension fee equal to 25 basis points of the
facility at initial maturity and certain other customary conditions. As of March 31, 2011, the
Company has not drawn any funds under the facility.

The Company can elect to have borrowings under the credit facility bear interest at a rate
per annum equal to (i) LIBOR plus 350 basis points to 400 basis points, depending on our leverage
ratio, or (ii) a base rate plus 250 basis points to 300 basis points, depending on our leverage
ratio. The secured revolving credit facility contains an accordion feature that allows us to
increase the total commitment by $90.0 million, to $200.0 million, under specified circumstances.

The total amount available for us to borrow under the facility will be subject to the lesser
of a percentage of the appraised value of our properties that form the designated borrowing base
properties of the facility, a minimum borrowing base debt service coverage ratio and a minimum
borrowing base debt yield. As of March 31, 2011, $100.8 million was available for us to borrow
under the facility. Our ability to borrow under the facility is subject to ongoing compliance
with a number of customary restrictive covenants, including:

 a maximum leverage ratio (defined as consolidated total indebtedness to total gross asset
value) of 55%;

 a maximum recourse debt ratio (defined as recourse indebtedness other than indebtedness
under the revolving credit facility to gross asset value) of 30%; and

 a minimum tangible net worth equal to at least 75% of our tangible net worth at the
closing of our IPO plus 80% of the net proceeds of any additional equity issuances.

427 S. LaSalle

As of March 31, 2011, the 427 S. LaSalle property had a senior mortgage loan, subordinate
mortgage loan and mezzanine loan payable of $25.0 million, $5.0 million and $10.0 million,
respectively, which mature on March 9, 2012. These loans are secured by deeds of trust on the
property and require payments of interest only until maturity. The mortgage requires ongoing
compliance by us with various nonfinancial covenants. As of March 31, 2011, the Company was in
compliance with the covenants.

On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S. LaSalle
property at a discount. As a result of this discounted payoff, we reduced our debt by $10.0
million, paying $9.5 million in cash and recognizing a $0.5 million gain, net of fees on the
transaction.

55 S. Market

As of March 31, 2011, the 55 S. Market property had a $60.0 million mortgage loan, which
matures on October 9, 2012. The mortgage payable contains one two-year extension option provided
the Company meets certain financial and other customary conditions and subject to the payment of
an extension fee equal to 60 basis points. The loan bears interest at LIBOR plus 350 basis points
and requires the payment of interest only until maturity. The mortgage requires ongoing
compliance by us with various covenants including liquidity and net operating income covenants.
As of March 31, 2011, the Company was in compliance with the covenants.

As of March 31, 2011, the 12100 Sunrise Valley property had a mortgage loan payable of $25.6
million. We may make additional draws of up to $6.4 million to fund specified construction under
the loan agreement for a maximum total borrowing of $32.0 million. The mortgage loan payable is
secured by 12100 Sunrise Valley and requires payments of interest only until the amortization
commencement date on July 1, 2011. The loan matures on June 1, 2013 and we may exercise the one
remaining one-year extension option provided the Company meets certain financial and other
customary conditions and subject to the payment of an extension fee equal to 50 basis points. The
mortgage loan payable contains certain financial and nonfinancial covenants. As of March 31,
2011, the Company was in compliance with all covenants.

Debt Maturities

The following table summarizes our debt maturities as of March 31, 2011 (in thousands):

Year

2011

$

132

2012

100,277

(1)

2013

25,151

Total

$

125,560

(1)

On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S.
LaSalle property which was scheduled to mature on March 9, 2012.

Commitments and Contingencies

The following table summarizes our contractual obligations as of March 31, 2011, including
the maturities and scheduled principal repayments of indebtedness (in thousands):

Remainder of

2011

2012

2013

2014

2015

Thereafter

Total

Operating leases

$

12,513

$

17,044

$

17,457

$

17,742

$

17,620

$

44,255

$

126,631

Credit Facility















Mortgages payable

132

100,277

(1)

21,151







121,559

Construction Contracts

20,952











20,952

Other (2)

2,209

2,181

278

151

104

189

5,112

Total

$

35,806

$

119,502

$

38,886

$

17,893

$

17,724

$

44,444

$

274,255

(1)

On April 29, 2011, the Company repaid the $10.0 million mezzanine loan on the 427 S.
LaSalle property which was scheduled to mature on March 9, 2012.

(2)

Obligations for tenant improvement work at 55 S. Market Street, power contracts and
telecommunications leases.

Off-Balance Sheet Arrangements

As of March 31, 2011, our Company did not have any off-balance sheet arrangements.

Related Party Transactions

We lease 1,515 net rentable square feet of space at our 12100 Sunrise Valley property to an
affiliate of Carlyle. The lease commenced on July 1, 2008 and expires on June 30, 2013. Rental
revenue was less than $0.1 million and $0.3 million for the three months ended March 31, 2011 and
2010, respectively.

Funds From Operations

We consider funds from operations (FFO) to be a supplemental measure of our performance
which should be considered along with, but not as an alternative to, net income and cash provided
by operating activities as a measure of operating performance and liquidity. We calculate FFO in
accordance with the standards established by the National Association of Real Estate Investment
Trusts (NAREIT). FFO represents net income (loss) (computed in accordance with GAAP), excluding
gains (or losses) from sales of property, plus real estate related depreciation and amortization
(excluding amortization of deferred financing costs) and after adjustments for unconsolidated
partnerships and joint ventures.

Our management uses FFO as a supplemental performance measure because, in excluding real
estate related depreciation and amortization and gains and losses from property dispositions, it
provides a performance measure that, when compared year over year, captures trends in occupancy
rates, rental rates and operating costs.

We offer this measure because we recognize that FFO will be used by investors as a basis to
compare our operating performance with that of other REITs. However, because FFO excludes
depreciation and amortization and captures neither the changes in the value of our properties
that result from use or market conditions, nor the level of capital expenditures and capitalized
leasing commissions necessary to maintain the operating performance of our properties, all of
which have real economic effect and could materially impact our financial condition and results
from operations, the utility of FFO as a measure of our performance is limited. FFO is a non-GAAP
measure and should not be considered a measure of liquidity, an alternative to net income, cash
provided by operating activities or any other performance measure determined in accordance with
GAAP, nor is it indicative of funds available to fund our cash needs, including our ability to
pay dividends or make distributions. In addition, our calculations of FFO are not necessarily
comparable to FFO as calculated by other REITs that do not use the same definition or
implementation guidelines or interpret the standards differently from us. Investors in our
securities should not rely on these measures as a substitute for any GAAP measure, including net
income. The following table is a reconciliation of our net loss to FFO:

Three Months Ended March 31,

(in thousands)

2011

2010

Net loss

$

(7,916

)

$

(906

)

Real estate depreciation and amortization

19,237

3,133

FFO

$

11,321

$

2,227

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based
upon our consolidated financial statements, which have been prepared in accordance with GAAP. The
preparation of these financial statements in conformity with GAAP requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses during the reporting
period. Our actual results may differ from these estimates. We have provided a summary of our
significant accounting policies in Note 2 to our consolidated financial statements included
elsewhere in this report. We describe below those accounting policies that require material
subjective or complex judgments and that have the most significant impact on our financial
condition and results of operations. Our management evaluates these estimates on an ongoing
basis, based upon information currently available and on various assumptions management believes
are reasonable as of the date of this prospectus.

Acquisition of Real Estate. We apply purchase accounting to the assets and liabilities
related to all of our real estate investments acquired. Accordingly, we are required to make
subjective assessments to allocate the purchase price paid to the acquired tangible assets,
consisting primarily of land, building and improvements, and identified intangible assets and
liabilities, consisting of the value of above-market and below-market leases and lease
origination costs. These allocation assessments involve significant judgment and complex
calculations and have a direct impact on our results of operations.

Capitalization of Costs. We capitalize direct and indirect costs related to leasing,
construction, redevelopment and development, including property taxes, insurance and financing
costs relating to properties under development. We cease cost capitalization on redevelopment and
development space once the space is ready for its intended use and held available for occupancy.
All renovations and betterments that extend the economic useful lives of assets are capitalized.

Useful Lives of Assets. We are required to make subjective assessments as to the useful
lives of our properties for purposes of determining the amount of depreciation to record on an
annual basis with respect to our investments in real estate. These assessments have a direct
impact on our net income. Buildings are depreciated on a straight-line basis over 27 to 40 years.
Additionally we depreciate building improvements over ten years for owned properties and the
remaining term of the original lease for leased properties. Leasehold improvements are
depreciated over the shorter of the lease term or useful life of the asset.

Impairment of Long-Lived Assets. We review the carrying value of our properties for
impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Impairment is recognized when estimated expected future cash flows
(undiscounted and without interest charges) from an asset are less than the carrying amount of
the asset. The estimation of expected future net cash flows is inherently uncertain and relies to
a considerable extent on assumptions regarding current and future economic and market conditions
and the availability of capital. If, in future periods, there are changes in the estimates or
assumptions incorporated into an impairment review analysis, these changes could result in an
adjustment to the carrying amount of our assets. To the extent that an impairment has occurred,
the excess of the carrying amount of the property over its estimated fair value would be charged
to income. No such impairment losses have been recognized to date.

Goodwill. The excess of the cost of an acquired business over the net of the amounts
assigned to assets acquired (including identified intangible assets) and liabilities assumed is
recorded as goodwill. The Companys goodwill has an indeterminate life and is not amortized, but
is tested for impairment on an annual basis, or more frequently if events or changes in
circumstances indicate that the asset might be impaired.

Revenue Recognition. Rental income is recognized on a straight-line basis over the
non-cancellable term of customer leases. The excess of rents recognized over amounts
contractually due pursuant to the underlying leases are recorded as deferred rent receivable on
our balance sheets. Many of our leases contain provisions under which our customers reimburse us
for a portion of direct operating expenses, including power, as well as real estate taxes and
insurance. Such reimbursements are recognized in the period that the expenses are recognized. We
recognize the amortization of the acquired above-market and below-market leases as decreases and
increases, respectively, to rental revenue over the remaining non-cancellable term of the
underlying leases. If the value of below-market leases includes renewal option periods, we
include such renewal periods in the amortization period utilized.

Interconnection and utility services are considered separate earnings processes that are
typically provided and completed on a month-to-month basis and revenue is recognized in the
period that the services are performed. Set-up charges and utility installation fees are
initially deferred and recognized over the term of the arrangement or the expected period of
performance unless management determines a separate earnings process exists related to an
installation charge.

We must make subjective estimates as to when our revenue is earned and the collectability of
our accounts receivable related to rent, deferred rent, expense reimbursements and other income.
We analyze individual accounts receivable and historical bad debts, customer concentrations,
customer creditworthiness and current economic trends when evaluating the adequacy of the
allowance for bad debts. These estimates have a direct impact on our net income because a higher
bad debt allowance would result in lower net income and recognizing rental revenue as earned in
one period versus another would result in higher or lower net income for a particular period.

Share-Based Awards. We generally recognize compensation expense related to share-based
awards on a straight-line basis over the vesting period of the award. The calculation of the fair
value of share-based awards is subjective and requires several assumptions over such items as
expected stock volatility, dividend payments and interest rates. These assumptions have a direct
impact on our net income because a higher share-based awards amount would result in lower net
income for a particular period.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2010-28, IntangiblesGoodwill and Other. This ASU amends ASC Topic
350 and clarifies the requirement to test for impairment of goodwill. ASC Topic 350 has required
that goodwill be tested for impairment if the carrying amount of a reporting unit exceeds its
fair value. Under ASU 2010-28, when the carrying amount of a reporting unit is zero or negative
an entity is required to assess, considering qualitative factors such as those used to determine
whether a triggering event would require an interim goodwill impairment test, whether it is more
likely than not that a goodwill impairment exists and perform step 2 of the goodwill impairment
test if so concluded. The modifications to ASC Topic 350 resulting from the issuance of ASU
2010-28 are effective for fiscal years beginning after December 15, 2010 and interim periods
within those years. The new guidance was effective January 1, 2011 for the Company. The adoption
of this standard did not have an impact on our condensed consolidated financial statements.

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements. The
new standard changes the requirements for establishing separate units of accounting in a
multiple-element arrangement and requires the allocation of arrangement consideration to each
deliverable based on the relative selling price. ASU 2009-13 is effective for revenue
arrangements entered into in fiscal years beginning on or after June 15, 2010. The new guidance
was effective January 1, 2011 for the Company. The adoption of this standard did not have a
material impact on our condensed consolidated financial statements.

Distribution Policy

In order to comply with the REIT requirements of the Code, we are generally required to make
annual distributions to our shareholders of at least 90% of our taxable net income. Our common
share distribution policy is to distribute a percentage of our cash flow that ensures that we
will meet the distribution requirements of the Code and that allows us to maximize the cash
retained to meet other cash needs, such as capital improvements and other investment activities.

We have made distributions every quarter since our IPO. While we plan to continue to make
quarterly distributions, no assurances can be made as to the frequency or amounts of any future
distributions. The payment of common share distributions is dependent upon our financial
condition, operating results and REIT distribution requirements and may be adjusted at the
discretion of the Board during the year.

Inflation

Substantially all of our leases contain annual rent increases. As a result, we believe that
we are largely insulated from the effects of inflation. However, any increases in the costs of
redevelopment or development of our properties will generally result in a higher cost of the
property, which will result in increased cash requirements to develop our properties and
increased depreciation expense in future periods, and, in some circumstances, we may not be able
to directly pass along the increase in these development costs to our customers in the form of
higher rents.

Our future income, cash flows and fair values relevant to financial instruments are
dependent upon prevalent market interest rates. Market risk refers to the risk of loss from
adverse changes in market prices and interest rates. The primary market risk to which we believe
we are exposed is interest rate risk. Many factors, including governmental monetary and tax
policies, domestic and international economic and political considerations and other factors that
are beyond our control contribute to interest rate risk.

As of March 31, 2011, we had $125.6 million of consolidated indebtedness that bore interest
at variable rates. $40.0 million and $25.0 million of our consolidated indebtedness is hedged
against LIBOR interest rate increases above 7.24% and 2.0%, respectively. In addition, we entered
into a swap agreement that effectively fixed the interest rate on $60.0 million of consolidated
indebtedness under our 55 S. Market mortgage at 4.01% through the maturity date of such
indebtedness.

We monitor our market risk exposures using a sensitivity analysis. Our sensitivity analysis
estimates the exposure to market risk sensitive instruments assuming a hypothetical 1% change in
year-end interest rates. If interest rates were to increase by 1%, the increase in interest
expense on our variable rate debt (excluding the $60.0 million of consolidated indebtedness under
our 55 S. Market mortgage that is hedged through our interest rate swap) would decrease future
earnings and cash flows by less than $0.7 million annually. If interest rates were to decrease
1%, the decrease in interest expense (excluding the $60.0 million of consolidated indebtedness
under our 55 S. Market mortgage that is hedged through our interest rate swap) on the variable
rate debt would be less than $0.7 million annually. Interest risk amounts were determined by
considering the impact of hypothetical interest rates on our financial instruments.

These analyses do not consider the effect of any change in overall economic activity that
could occur in that environment. Further, in the event of a change of that magnitude, we may take
actions to further mitigate our exposure to the change. However, due to the uncertainty of the
specific actions that would be taken and their possible effects, these analyses assume no changes
in our financial structure.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be
disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported
within the time periods specified in the SECs rules and regulations and that such information is
accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management is required to
apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

As of March 31, 2011, the end of the period covered by this Quarterly Report, we carried out
an evaluation, under the supervision and with the participation of management, including our
Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our
disclosure controls and procedures at the end of the period covered by this Quarterly Report.
Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded, as of
that time, that our disclosure controls and procedures were effective in ensuring that
information required to be disclosed by us in reports filed or submitted under the Exchange Act
(i) is processed, recorded, summarized and reported within the time periods specified in the
SECs rules and forms and (ii) is accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer, as appropriate to allow for timely
decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during our last
fiscal quarter that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

In the ordinary course of our business, we are subject to claims for negligence and other
claims and administrative
proceedings, none of which we believe are material or would be expected to have,
individually or in the aggregate, a material adverse effect on our business, financial condition
or results of operations.

As previously disclosed, we are involved in litigation in Colorado District Court in Denver
with Ari Brumer, the former general counsel of our affiliate CoreSite, LLC, arising out of the
termination of Mr. Brumers employment. Mr. Brumer alleges that he was fraudulently induced to
accept employment with CoreSite, LLC, and that his employment was terminated in retaliation for
his assertions of illegal or improper acts by the Company or our affiliates. We have filed
counterclaims against Mr. Brumer based on his intentional disruption of our initial public
offering for personal advantage after his employment was terminated.
The court previously dismissed one of Mr.
Brumers claims as legally insufficient and, on April 27, 2011, confirmed the dismissal with
prejudice of all his claims against our chief executive officer individually.

Because the case is still in the preliminary stages, the cost of the litigation and its
ultimate resolution are not estimable at this time. We believe that we have valid defenses to Mr.
Brumers remaining claims and that there is significant merit to our counterclaims against Mr.
Brumer. We intend to vigorously defend the case and pursue our counterclaims against Mr. Brumer.
Based on the claims and damages asserted and the probability of an unfavorable outcome, we
believe that the litigation will not have a material adverse effect on our business, financial
position or liquidity.

ITEM 1.A

RISK FACTORS

There have been no material changes to the risk factors included in the section entitled
Risk Factors beginning on page 14 of our Annual Report on Form 10-K, filed with the SEC on
March 11, 2011 pursuant to Section 15(d) of the Exchange Act, which is accessible on the SECs
website at www.sec.gov.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On September 22, 2010, our registration statement on Form S-11 (File No. 333-166810),
relating to our initial public offering, was declared effective by the SEC. We intend to use the
remainder of the net proceeds from the offering to redevelop and develop additional data center
space and for general corporate purposes.
During the quarter ended March 31, 2011, we did not issue or sell any shares of our common stock or other equity securities pursuant
to unregistered transactions in reliance upon on exception from registration requirements of the Securities Act of 1933, as amended.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

RESERVED

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS.

Exhibit

No.

Description

3.1

Articles of Amendment and Restatement of CoreSite Realty Corporation.(1)